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British Gas to Raise Prices £97 from April

Millions of British Gas customers will pay nearly £100 a year more for their energy from April, as the energy giant responds to the new level of the price cap.

Energy regulator Ofgem announced earlier this month that the energy price cap, which limits the bills of the 11 million households on standard variable tariffs, would rise by £96 to £1,138 from 1 April. For the four million households with pre-payment meters, the cap will jump £87 to £1,156.

The regulator said it was raising the cap in response to surging wholesale gas and electricity costs. After tumbling through much of 2020 as demand fell due to national lockdowns, wholesale energy markets have soared as Europe weathers a freezing winter and liquid natural gas (LNG) imports are diverted to Asia.

Additionally, £23 of the rise will help energy suppliers recoup cash from households which fell behind on bills during the coronavirus crisis.

British Gas is the first major energy supplier to react to the adjustment of the price cap. From April, it will raise charges for its default tariff by £97 to £1,138 for a dual-fuel household with typical use—the highest level allowed by the cap. The price change is expected to impact the 2.3 million customers on its default tariff and net the supplier an additional £230 million.

British Gas is the country's largest supplier but isn't known for being a bargain. In Which?'s annual league table of energy suppliers, customers gave British Gas just two stars for "value for money," contributing to the company's 18th place finish, out of 25 ranked suppliers.

However, other suppliers are expected to follow British Gas and announce similar price increases in the coming weeks.

Customers can dodge the price hikes by seeking out a fixed energy tariff from a competitor. Currently, challenger suppliers are offering energy deals that are £200 cheaper per year than default tariffs under the price cap.

Ofgem has reminded customers that the price cap isn’t supposed to guarantee them the best deal on energy but rather to protect customers who don’t move from default tariffs from price-gouging.

The regulator has also urged customers who are concerned about increased prices and about their ability to pay their bills to contact their suppliers. Suppliers have committed to halting disconnections, issuing emergency credit to customers struggling to top up their pre-payment meters and offering households in arrears affordable repayment plans.

Ofgem chief executive Jonathan Brearley said: “As the UK still faces challenges around COVID-19, during this exceptional time I expect suppliers to set their prices competitively, treat all customers fairly and ensure that any household in financial distress is given access to the support they need. 

“The government and Ofgem have been working with the energy industry and consumer groups to support customers through this difficult time and I urge anyone worried about paying their energy bills to contact their supplier and access the help available.” 

Lauren Smith
Lauren Smith

Lauren Smith has worked as a journalist and copywriter for most of the last decade, covering technology, energy, and consumer rights, in the US and UK.

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